SHEET METAL WORKERS NATIONAL PENSION FUND

Transcription

1 SHEET METAL WORKERS NATIONAL PENSION FUND NOTICE OF BENEFIT CHANGES Dear Sir or Madam: This Notice is sent to you in accordance with Section 204(h) of the Employee Retirement Income Security Act of 1974 ( ERISA ). This notice explains changes in the way your pension benefit will be determined for Contribution Hours worked on or after January 1, It also explains how your service will be used to determine the amount of your final pension benefit. NOTE: if you are retired, this Notice will have no effect on you. As you know from the preceding Notice, the Plan s actuary has certified that the Sheet Metal Workers National Pension Fund ( NPF, Fund, or Plan ) has entered Endangered Status as of the 2014 Plan Year. Because the Fund has entered into Endangered Status, optional forms of benefits and early retirement subsidies (e.g. 55/30 Pension, 60/30 Pension, Age 62 Pension, Special Early Retirement, Standard Early Retirement, or Unsubsidized Early Retirement Pension) are preserved for eligible Participants for all Pension Credit earned as of December 31, Also, the Plan Document was changed to incorporate certain provisions of the First and Second Alternative Schedules, the Default Schedule, and the consequences of not making increases ( NIC ). Among other things, the revised Plan continues to require annual contribution rate increases in order to preserve certain early retirement subsidies and optional forms of benefits. These recent Plan amendments, which take effect for pensions after January 1, 2014, change the way an early retirement pension is determined. Before these changes, a person who retired on or before January 1, 2014, had early retirement subsidies, if any, determined on his or her entire Normal Retirement Pension benefit (which is the amount payable at age 65). Eligibility for subsidies was dependent also on the Rehabilitation Plan Schedule that covered a Participant. Here is an example. EXAMPLE 1 John retires January 1, 2014 at age 55. As of December 31, 2013, he had earned a Normal Retirement Pension benefit payable at age 65 of $1000. Because John is retiring before Normal Retirement Age (65) his pension may be subject to an early retirement age reduction based on the Schedule that was applicable under his Home Local Collective Bargaining Agreement ( CBA ). Let s say the CBA that John is working under had adopted the First Alternative Schedule. Under this Schedule, assuming John meets the applicable service requirements, he would be offered one of the following as a Lifetime Benefit, in addition to the optional forms of payment: Standard Early Retirement Pension - $ 400 per month Special Early Retirement Pension - $ 580 per month; or 55/30 Pension - $ 1000 per month. Each of these forms of early retirement pensions includes a subsidy, meaning that the amount paid is more than it would be were if it were fully adjusted for John s age at retirement. See section below titled Information on Early Retirement Subsidies for details on age reduction factors and subsidies. Because the Plan has emerged into Endangered Status as of the 2014 Plan Year, both early retirement subsidies and optional forms are preserved for Normal Retirement Pension benefits earned as of December 31, In other words, if John postpones retirement and keeps working he will continue to be eligible for the subsidies described above, for benefits earned through December 31, 2013, even if the bargaining parties (local union and employers) elect not to make increases in future years. 1

2 Under the revised Plan Document, eligible bargaining parties that wish to continue to earn comparable subsidized early retirement and optional forms of benefits on Contribution Hours worked on and after January 1, 2014, must continue to make required contribution rate increases. Below find a summary of the scenarios in which early retirement subsidies and optional forms can continue to be earned. For more information on optional forms, see the section below titled Optional Forms of Benefits. Scenario A - To continue receipt of early retirement subsidies and optional forms comparable to those offered under the First Alternative Schedule, for Contribution Hours after December 31, 2013, the bargaining parties must make the following annual contribution rate increases: 2014 Plan Year Increase: 7% times the Contribution Rate in effect on December 31, 2013; 2015 Plan Year Increase: 7% times the Contribution Rate in effect on December 31, 2014; 2016 Plan Year Increase: 7% times the Contribution Rate in effect on December 31, 2015; and 2017 Plan Year Increase: 7% times the Contribution Rate in effect on December 31, Scenario B - In lieu of the 7% annual increases, the bargaining parties that had adopted the First Alternative Schedule or the Second Alternative Schedule can continue receipt of early retirement subsides and optional forms comparable to those offered under the Second Alternative Schedule, for Contribution Hours after December 31, 2013, provided they make the following annual contribution rate increases: 2014 Plan Year Increase: 3.5% times the Contribution Rate in effect on December 31, 2013; 2015 Plan Year Increase: 3.5% times the Contribution Rate in effect on December 31, 2014; 2016 Plan Year Increase: 3.5% times the Contribution Rate in effect on December 31, 2015; and 2017 Plan Year Increase: 3.5% times the Contribution Rate in effect on December 31, If a bargaining unit, which was covered by the First or Second Alternative Schedule as of December 31, 2013, wants to continue to accrue comparable early retirement subsidies and optional forms, the bargaining parties must abide by the annual contribution increase requirements provided in the Plan Document as shown above. The increases under Scenarios A or B should be made by the due date for contribution increases under the applicable Collective Bargaining Agreement ( CBA ). Please note: if the bargaining parties elect to reduce or eliminate a required annual contribution rate increase, only Contribution Hours worked on or after the date of the change will be affected. Also, once a bargaining unit elects to reduce or eliminate a required contribution rate increase, it cannot restore or again qualify for early retirement subsidies or optional forms on a prospective basis. (See summary below for a description of benefits.) A bargaining unit covered under the Default Schedule or the No Increase Consequences ( NIC ) as of December 31, 2013, (while the Plan was in Critical Status), will continue to qualify for comparable benefits for Contribution Hours worked on or after January 1, 2014, as these changes have been incorporated into the Plan Document. Note also that nothing in the Plan prevents the bargaining parties under such CBAs from making increases, which will result in an increase in Normal Retirement Pension benefits; however, the contribution rate increases will not restore subsidized early retirement benefits or eligibility for optional forms. Information on Early Retirement Subsidies In most pension funds like the National Pension Fund, the Normal Retirement Age ( NRA ) is 65. If a Participant retires before age 65, the benefit is an early retirement pension. If a Participant retires before NRA, his pension is actuarially reduced to take into account the fact that benefits will be paid for a longer period. For instance, a person who retires at 55 and lives until age 85 receives 30 years of monthly pension payments; a person who retires at 65 and lives to age 85 receives 20 years of monthly pension payments. NPF permits eligible retirees to retire as early as age 55 on a pension that is either unsubsidized or subsidized. This means that certain early retirement pensions are not fully reduced to take into account the receipt of pension at an age earlier than 65. Early retirement pensions offered under the Default 2

3 Schedule do not qualify for any subsidies and are subject to a full actuarial reduction for age at retirement. The difference between the full actuarial reduction and the actual age reduction is an early retirement subsidy." The following is a summary of the types of early retirement pensions available to Participants who qualified for benefits under the First Alternative Schedule ( FAS ) as of December 31, 2013, and for hours worked on or after January 2014 which are worked under the contribution rate increases described under Scenario A above. In Example 1 above, John requested an early retirement pension payable at age 55 under the First Alternative Schedule. At the time of his request, he had earned a Normal Retirement Pension benefit of $1000. In the following illustrations, depending on whether he had met certain service requirements John was eligible for one of the following: Under the Standard Early Retirement Pension, an eligible Participant s Normal Retirement Pension benefit is reduced by an age reduction factor for each month an eligible Participant retires before NRA (age 65). The age reduction factors for Standard Early Retirement Pension are 6% per year (and fraction thereof considering your age in years and months), from age(s) This means that if a Participant covered under the First Alternative Schedule retires under the Standard Early Retirement Pension at age 55, his monthly benefit will be 40% of the amount payable at NRA. Our hypothetical Participant John would be eligible for $400 a month on a Standard Early Retirement. The Special Early Retirement Pension reduces an eligible Participant s Normal Retirement Pension benefit by an age reduction factor for each month an eligible Participant retires before age 62. If a Participant retires and has attained age 62 under this option, there is no reduction for age. Under the First Alternative Schedule, the age reduction factor is currently 6% per year (and fraction thereof), from age(s) This means that if a Participant retires at age 55, his monthly benefit will be 58% of the amount payable at NRA. Our hypothetical Participant John would be eligible for $580 a month on a Special Early Retirement. Under the 55/30 Pension, an eligible Participant s early retirement pension is equal to the amount of his Normal Retirement Pension benefit. This means that if a Participant covered under the First Alternative Schedule retires under a 55/30 Pension and has attained age 55, his monthly benefit will be 100% of the amount payable at NRA. Our hypothetical Participant John would be eligible for $1000 on a 55/30 Pension. The following is a summary of the types of early retirement pensions available to Participants who qualified for benefits under the Second Alternative Schedule ( SAS ) as of December 31, 2013, and for hours worked on or after January 2014 which include contribution rate increases described under Scenario B. Under the 60/30 Pension, an eligible Participant s early retirement pension is equal to the amount of his Normal Retirement Pension benefit. This means that if a Participant covered under the Second Alternative Schedule retires under a 60/30 Pension and has attained age 60, his monthly benefit will be 100% of the amount payable at NRA. The Age 62 Pension, an eligible Participant s early retirement benefit is equal to the amount of his Normal Retirement Pension benefit. This means that if a Participant covered under the Second Alternative Schedule retires under an Age 62 Pension and has attained age 62, his monthly benefit will be 100% of the amount payable at NRA. Unsubsidized Early Retirement Pension, an eligible Participant s early retirement monthly pension benefit is fully unsubsidized for age. Refer to Chart 1 below for age reduction factors. 3

4 The following is a summary of the types of early retirement pensions available to Participants who qualified for benefits under the No Increase Consequence ( NIC ) as of December 31, 2013, and for hours worked on or after January 2014 which were under a CBA that was deemed NIC while the Plan was in Critical Status. The Age 62 Pension, an eligible Participant s early retirement benefit is equal to the amount of his Normal Retirement Pension benefit. This means that if a Participant covered under NIC retires under an Age 62 Pension and has attained age 62, his monthly benefit will be 100% of the amount payable at NRA. Unsubsidized Early Retirement Pension, an eligible Participant s early retirement monthly pension benefit is fully unsubsidized for age. Refer to Chart 1 below for age reduction factors. For Participants whose early retirement pensions are determined under the Default Schedule or who are deemed persons for whom contributions are not required to be made as of December 31, 2013, or for Contribution Hours worked on or after January 2014 under CBA s that had adopted the Default Schedule when the Plan was in Critical Status, or for Contribution Hours worked under a CBA which elected not to make required increases under Scenarios A or B above early retirement benefits in these circumstances do not include a subsidy. Unsubsidized Early Retirement Pension, an eligible Participant s early retirement monthly pension benefit is fully unsubsidized for age. Refer to Chart 1 below for age reduction factors. Chart 1 Unsubsidized Early Retirement Factors Age in Months Age in Years Optional Forms of Benefits Under the Plan, if a Participant is married at the time he retires, in addition to the Lifetime Pension, he will also be offered a 50% Joint and Survivor Annuity, a 75% Joint and Survivor Annuity, and a 100% Joint and Survivor Annuity option. In addition, a Participant whose Normal Retirement Pension benefit earned as of December 31, 2013 is based on either the First Alternative Schedule or the Second Alternative Schedule may qualify for the 60-Month Certain and the reversion feature (also referred to as the pop-up). For Contribution Hours worked on or after January 1, 2014, these optional forms are available for each hour provided the bargaining parties continue to make required annual increases as described in Scenario A or B summarized above. 4

5 The 60-Month Certain Payments In order to qualify for the 60-Month Certain, an eligible Participant must earn a minimum of 15 years of Pension Credit and elect to receive either a Lifetime Pension or a 50% Joint and Survivor Annuity option. If elected, and the Participant dies (under a Lifetime Pension) before receiving 60 monthly payments, or both he and his spouse (under a 50% Joint and Survivor Annuity option) die before 60 monthly payments have been made, any remaining payments would be paid to his designated beneficiary until 60 monthly payments had been made. Again, this benefit is only available for Contribution Hours worked under Collective Bargaining Agreements, which made annual required contribution rate increases as described above. EXAMPLE 2 Suppose Karen s bargaining unit made all required annual contribution rate increases. Since Karen has earned a minimum of 15 years of Pension Credit, both the Lifetime Pension and 50% Joint and Survivor Annuity option includes a 60-Month Certain. Let s say that Karen elects a 50% Joint and Survivor Annuity option and dies having only received 12 monthly payments. Under this option, her spouse would be entitled to 50% of her amount for the rest of his life. However, in this example, Karen s spouse dies 6 months later. Under this option, her beneficiaries are entitled to the remaining payments under the 60-Month Certain. Again, this benefit is only available for Contribution Hours worked under Collective Bargaining Agreements, which made annual required contribution rate increases as described above. The Reversion Feature, also referred to as a Pop-up If a retiree elects a Joint and Survivor Annuity option and his spouse predeceases him, his monthly amount increases to a Lifetime Pension, the month following her death. Again, this benefit is only available for Contribution Hours worked under Collective Bargaining Agreements, which made annual required contribution rate increases as described above. EXAMPLE 3 Suppose Mike s bargaining unit made all required contribution rate increases through 2014; however, in 2015 the unit elected NOT to make an increase. Mike continues to work through 2016 and retires. Mike qualifies for the reversion feature on his benefits earned through 2014; however, benefits earned on or after 2015 (the date an increase is NOT made) do not qualify for this optional form. Mike is offered a Lifetime Benefit of $1854 per month; however, he elects a Joint and Survivor Annuity Option of $1669, which provides a benefit to his spouse after his death. In this example, Mike s spouse predeceases him. Because part of Mike s Joint and Survivor Annuity Option qualifies for a reversion, his monthly benefit increases to $1840 for his lifetime. As you will note, his benefit did not increase to the full Lifetime Benefit, because the difference ($ $1840) was earned after the bargaining unit did not make a required annual increase and therefore this portion of his benefit does not qualify for the reversion feature. Benefits for Contribution Hours earned on or after January 1, 2014 To summarize, because the Plan s actuary has certified that the Plan is in Endangered Status all early retirement subsidies and optional forms are preserved for eligible Participants as of December 31, In the event bargaining parties currently signed to a CBA that reflected either the First Alternative or Second Alternative Schedule(s) elects NOT to make an increase as described in Scenarios A or B above, there is no effect on benefits earned before the date the increase is NOT made; however, there is an effect on pension benefits earned after the increase is NOT made which is, the loss of early retirement subsidies and optional forms. If a CBA formerly required 7% annual increases or 3.5% annual increases, and the bargaining parties elect not to make a required contribution increase, then benefits earned on or after the date of the change will be adjusted. Likewise, if a Participant works under a different Schedule, because, for example, he travels outside his Home Local, or he transfers to another jurisdiction, then benefits will be determined under the applicable CBA. 5

6 Summary of Benefits For Contribution Hours worked on or after January 1, 2014 under CBAs that comply with the Contribution Rate requirements under Scenario A (as were required under the former First Alternative Schedule) Current Required Contribution Rate Increases 7% per year through 2017 Early Retirement must meet all eligibility requirements, including certain service requirements to qualify. Standard Early Retirement Pension Normal Retirement Pension benefit reduced 6% per year, or fraction thereof, younger than Normal Retirement Age (65) at the time of retirement. Special Early Retirement Pension Normal Retirement Pension benefit reduced 6% per year, or fraction thereof, younger than age 62. If Participant has attained age 62 monthly benefit is unreduced for age. Applicable Percentage at which benefits are earned for Normal Retirement Pension benefit Optional Forms - must meet certain service requirements to qualify. 55/30 Pension no age reduction. Monthly benefit equal to benefit payable at Normal Retirement Age. Variable Benefit Accrual Rate ( VBAR ) 60-Month Certain & reversion feature ( pop-up ) For Contribution Hours worked on or after January 1, 2014 under CBAs that comply with Contribution Rate requirements Scenario B above (as were required under the former Second Alternative Schedule) Current Required Contribution Rate Increases 3.5 % per year through 2017 Early Retirement must meet all eligibility requirements, including certain service requirements, to qualify. Unsubsidized Early Retirement Pension fully unsubsidized early retirement pension. See Chart 1 above for details. Age 62 Pension monthly benefit equal to benefit payable at Normal Retirement Age provided Participant has attained age 62 and meets service requirements for a Special Early Retirement Pension. 60/30 Pension no age reduction. Early retirement is equal to benefits payable at Normal Retirement Age, provided the Participant has attained age 60 and meets service requirements for a 55/30 Pension. Applicable Percentage at which benefits are earned for Normal Retirement Pension benefit Optional Forms - must meet certain service requirements to qualify. Variable Benefit Accrual Rate ( VBAR ) 60-Month Certain & reversion feature ( pop-up ) 6

7 For Contribution Hours worked on or after January 1, 2014 under CBAs that were classified as No Increase Consequence ( NIC ) while the Plan was in Critical Status Current Required Contribution Rate Increases Early Retirement must meet all eligibility requirements, including certain service requirements, to qualify. Applicable Percentage at which benefits are earned for Normal Retirement Pension benefit Optional Forms - must meet certain service requirements to qualify. No increase is currently required. Unsubsidized Early Retirement Pension fully unsubsidized early retirement pension. See Chart 1 above for details. Age 62 Pension monthly benefit equal to benefit payable at Normal Retirement Age provided Participant has attained age 62 and meets service requirements for a Special Early Retirement Pension. Variable Benefit Accrual Rate ( VBAR ) Ineligible for optional forms. For Contribution Hours worked on or after January 1, 2014 under CBA s that had adopted the Default Schedule while the Plan was in Critical Status, or under a CBA (formerly FAS or SAS) which did not make required increases under Scenario A or B above. Current Required Contribution Rate Increases Early Retirement must meet all eligibility requirements, including certain service requirements, to qualify. Applicable Percentage Normal Retirement Pension Optional Forms - must meet certain service requirements to qualify. No increase is currently required. Unsubsidized Early Retirement Pension fully unsubsidized early retirement pension. See Chart 1 above for details. Variable Benefit Accrual Rate ( VBAR ) Ineligible for optional forms. The following examples illustrate a Participant s benefit under the current Plan design. EXAMPLE 4 - As of December 31, 2013, Greg has earned 20 years of Future Service Credit under the First Alternative Schedule ( FAS ) and has earned a Normal Retirement Pension benefit of $2000. Greg continues to work for another 10 years under a CBA that provides for the 7% annual increases (currently required through 2017) and earns an additional $1000 in Normal Retirement Pension benefits and applies for pension at 55. Greg s Normal Retirement Pension benefit ( Benefits ), which is the starting point, is determined as follows: Benefits as of 12/31/13 Benefits 1/1/14 through his last day of work $2000 under the First Alternative Schedule + $1000 under CBAs that have made 7% annual increases $3000 Normal Retirement Pension benefit Greg s Early Retirement Pension $2000 (unreduced for age as he qualifies for 55/30 Pension) +$1000 (unreduced for age as he qualifies for 55/30 Pension) $3000 Lifetime Benefit payable at age 55 Since Greg is working under a CBA, which includes a 55/30 Rate, he qualifies for a 55/30 Pension and will receive a monthly benefit of $3000 payable at age 55. Additionally, as he has earned a minimum of 15 years Pension 7

8 Credit, his monthly benefit will qualify for the 60-Month Certain and the reversion feature on his Joint and Survivor Annuity Options. EXAMPLE 5-55/30 applies to a part of the benefit As of December 31, 2013, Ed has earned 20 years of Future Credit under CBA s that made all required annual contribution increases and has earned a Normal Retirement Pension benefit of $2000. Ed continues to earn 10 years of Future Service Credit; however, in January 2014 the bargaining parties DO NOT make any increases. Since Ed is working under a CBA, which includes a 55/30 Rate, he qualifies for a 55/30 Pension, in part, limited to benefits earned as of December 31, Because, however, the bargaining parties did not make the required increases as of January 2014, benefits earned on or after this date will not earn any subsidized early retirement benefits or optional forms, including but not limited to the 55/30 Pension. Ed applies for pension at age 55. His monthly benefit is determined as follows: Ed s Normal Retirement Pension benefit ( Benefits ) is determined as follows: Benefits as of 12/31/13 Benefits 1/1/14 through his last day of work $2000 under the FAS + $1000 under CBAs that HAVE NOT made 7% annual increases $3000 Normal Retirement Pension benefit Ed s Early Retirement Pension $ (unreduced for age as he qualifies for 55/30 Pension on part) +$ (eligible for 35.69% on an Unsubsidized Early Retirement Pension) $ Lifetime Benefit payable at age 55 Since Ed is working under a CBA, which includes a 55/30 Rate, he qualifies for a 55/30 Pension on the portion of the benefit he earned through December 31, However, he does not earn any early retirement subsidies on or after January 2014, so benefits earned for this service are fully reduced for age at retirement. Additionally, as he has earned a minimum of 15 years Pension Credit, benefits earned as of December 31, 2013 qualify for the 60-Month Certain and, if married, the reversion feature or the pop-up on his Joint and Survivor Annuity Options. Benefits earned on or after January 2014 (when the increases stopped) do not qualify for either the 60-Month Certain or the reversion feature or pop-up for benefits earned after the increase is NOT made. Example 6-55/30 applies to a part of the benefit As of December 31, 2013, Al has earned 20 years of Future Credit under CBA s that made all of the required contribution rate increases and has earned a Normal Retirement Pension benefit of $2000 through December 31, In January 2014, the bargaining parties elect to make an annual increase of 3.5% through 2015 (instead of 7%), and effective January 2016, the bargaining parties elect NOT to make any further contribution rate increases. Al continues to work through 2023 and earns an additional $1000 in Normal Retirement Pension benefits. Al applies for pension at age 60. His monthly benefit is determined as follows: Al s Normal Retirement Pension benefit ( Benefits ) is determined as follows: Benefits as of 12/31/13 Benefits 1/1/14 through 12/15 Benefits 1/1/16 through 12/23 $2000 under the FAS $ 200 under CBAs that made 3.5% annual increases + $ 800 under CBAs that DID NOT make annual increases $3000 Normal Retirement Pension benefit Al s Early Retirement Pension $ (unreduced for age as he qualifies for 55/30 Pension) $ (unreduced for age as he qualifies for 60/30 Pension) +$ ((eligible for Unsubsidized Early Retirement (58.99% x $800)) $ Lifetime Benefit payable at age 60 8

9 Since Al is working under a CBA that includes a 55/30 Rate, he qualifies for a 55/30 Pension on a part of his pension that he earned under CBA s that make all required increases described in Scenario A and a 60/30 Pension on the part of his pension earned under Scenario B. Additionally, as he has a minimum of 15 years of Pension Credit, he also qualifies for both the 60-Month Certain and the reversion feature on Pension Credit earned through December 31, Because he earned Contribution Hours on and after January 2016 under CBAs that DID NOT make required increases he does not qualify for any subsidies, or optional forms on this portion of his benefit. EXAMPLE 7 - Part of the benefit for work under Default Schedule As of December 31, 2013, Jim has earned 20 years of Future Credit under CBA s that did not make any required increases since the Plan declared Critical Status and has earned a Normal Retirement Pension benefit of $2000 through December 31, In January 2014, Jim transfers to work into another local union and works under a CBA that elected to make an annual increase of 3.5% through 2015, and effective January 2016, the bargaining parties elect NOT to make any further contribution rate increases. Jim continues to work through 2023 and earns an additional $1000 in Normal Retirement Pension benefit. Jim applies for pension at age 60. His monthly benefit is determined as follows: Jim s Normal Retirement Pension benefit ( Benefits ) is determined as follows: Benefits as of 12/31/13 Benefits 1/1/14 through 12/15 Benefits 1/1/16 through 12/23 $2000 under the Default Schedule $ 200 under CBAs that made a 3.5% annual increase + $ 800 under CBAs that DID NOT make annual increases $3000 Normal Retirement Pension benefit Jim s Early Retirement Pension $ ((Unsubsidized Early Retirement Pension (58.99% x $2000)) $ (unreduced for age as he qualifies for 60/30 Pension on this part) + $ ((eligible for Unsubsidized Early Retirement (58.99% x $800)) $ Lifetime Benefit payable at age 60 When Jim transferred into a bargaining unit whose Contribution Rate includes a 55/30 Rate, he qualifies for a 60/30 Pension on the part of his pension that he earned under CBA s that made required increases described in Scenario B, and a fully unsubsidized early retirement pension under CBA s that did not make the required Contribution Rate increases. Additionally, as he has earned a minimum of 15 years of Pension Credit, he also qualifies for both the 60- Month Certain and the reversion feature on Pension Credit earned from January 2014 through December Changes for Persons for whom Employer Contributions are not currently Required to be Made A Participant who was classified as a person for whom Employer contributions are not required to be made while the Fund was in Critical Status does not qualify for any early retirement subsidies or optional forms. However, under the Rehabilitation Plan, if a Participant in this category returns to work in Covered Employment and earns one (1) Year of Service (870-Hours of Work in Covered Employment in a Plan Year) his benefits were re-adjusted in accordance with the applicable Schedule when the Contribution Hours were worked. The Plan now requires that a person for whom Employer contributions are not required to be made must earn a Year of Service before January 1, 2023, in order to qualify for this adjustment. It is important to remember that should a Participant earn a Year of Service, his benefit eligibility will remain subject to all applicable Plan rules and Schedules including but not limited to those relating to eligibility for benefits, early retirement delays, and minimum hours requirements. EXAMPLE 8 Steve separated from Covered Employment in 2010 having earned 20 years of Pension Credit. At the time he left, he was working under the First Alternative Schedule and had earned a Normal Retirement Pension benefit of $2000. Because he earned less than 435 Hours of Work in Covered Employment in 2011 and 9

10 no hours in 2012, Steve became a person for whom Employer contributions are not required to be made as of December 31, As a result, Steve no longer qualified for any early retirement subsidies or optional forms on his Normal Retirement Pension benefit earned as of this date. If Steve retired at age 55 without earning a Year of Service, he would qualify for an Unsubsidized Early Retirement Lifetime Benefit of $732 ($2000 x 36.59%), which does not include the 60-Month Certain or the reversion feature. His benefit would be determined under the factors shown in Chart 1 above. However, in 2014 Steve returns to work in Covered Employment through 2016 and earns a Year of Service under a CBA that makes all required increases described in Scenario A above. During this timeframe, he earns an additional $250 in Normal Retirement Pension benefits and retires at age 55. Steve s Normal Retirement Pension benefit ( Benefits ) is determined as follows: Benefits as of 12/31/10 Benefits 1/1/14 through of 2016 $2000 under the First Alternative Schedule + $ 250 under CBAs that have made 7% annual increases $2250 Normal Retirement Pension Benefit Steve s Early Retirement Pension $1160 ((eligible for *Special Early Retirement (58% x $2000)) +$ 145 ((eligible for *Special Early Retirement (58% x $250)) $1305 Lifetime Benefit payable at age 55, including optional forms EXAMPLE 8 Part 2 - Let s say that Steve remains out of Covered Employment/doesn t work at the trade through 2023, and instead returns to work in 2024 earning an additional $250 in Normal Retirement Pension benefits. Because Steve did not earn the Year of Service before January 1, 2023, his benefits before this date remain adjusted and DO NOT qualify for any subsides or optional forms; however, the portion earned on or after 2024 will qualify subsidies and optional forms. Steve s Normal Retirement Pension benefit ( Benefits ) is determined as follows: Benefits as of 12/31/10 $2000 while Steve was a person for whom Benefits 1/1/24 through of his last day of work + $ 250 under CBAs that have made 7% annual increases $2250 Normal Retirement Pension Benefit Steve s Early Retirement Pension $ ((eligible for an Unsubsidized Early Retirement (36.59% x $2000)) +$ ((eligible for *Special Early Retirement (58% x $250)) $877 Lifetime Benefit payable at age 55 *In these calculations, Steve earned the required 3500 Hours of Work in Covered Employment within the five calendar years preceding his Effective Date of Pension required to qualify for a Special Early Retirement Pension. Information on a Participant s Rights and Remedies Federal law requires that this Notice contain information as to the rights and remedies of Participants and Beneficiaries. Fund Participants have certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA), as amended. ERISA provides that all Participants have certain rights, including the following 10

11 Receive Information about the Pension Fund and Benefits You have the right to: Examine, without charge, at the Fund Office all documents governing NPF. These include the Rehabilitation Plan and Schedules, previous notices issued in connection with the Rehabilitation Plan, the Plan Document and Summary Plan Description, the Annual Funding Notice, periodic actuarial reports and other financial information and summaries, Collective Bargaining Agreements, any application for extension of amortization periods to the Secretary of Treasury and the Secretary s determination on that application, and a copy of the latest annual report (Form 5500 Series) filed by NPF with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor, 200 Constitution Avenue, NW, Suite N-1513, Washington, DC 20210, The Fund s address is listed below and on this letterhead. Obtain, upon written request to the Board of Trustees, copies of documents governing the NPF s operation. These include the Rehabilitation Plan and Schedules, all previous notices issued in connection with the Rehabilitation Plan, the Plan Document and Summary Plan Description, Summary of Material Modifications, the Annual Funding Notice, periodic actuarial reports, and other financial reports, information and summaries, Collective Bargaining Agreements, the latest annual report (Form 5500 Series), any application for extension of amortization periods to the Secretary of Treasury and the Secretary s determination on that application. There may be a reasonable charge for copies. Receive the Annual Funding Notice. This notice provides information regarding the Fund s funding levels, assets and liabilities, number of Participants and a description of the benefits eligible to be guaranteed by the PBGC and an explanation of the limits on the PBGC guarantee and other information. Obtain at no charge, a statement telling you whether you have a right to receive a pension at Normal Retirement Age (age 65) and if so, an estimate of benefits at Normal Retirement Age (age 65) if you stop working under NPF now. If you do not have a right to a pension, the statement will explain why that is. A written request for a statement must be made and the Fund need only provide one statement every 12 months. Obtain at least once every 3 years, a pension benefit statement showing your nonforfeitable accrued benefit provided that an employer maintaining the plan at the time the statement is to be furnished employs you. You may also obtain such a statement upon written request. Note also that if you have a filed an application for vesting information with the Fund Office, you can get an estimate of your benefit at Normal Retirement Age by going to the NPF website and click on Participant Sign in section. For documents and statements, write to Board of Trustees c/o Marc LeBlanc, Fund Administrator, Sheet Metal Workers National Pension Fund, 8403 Arlington Blvd, Suite 300, Fairfax, VA Prudent Actions by Plan Fiduciaries In addition to creating rights for Participants, ERISA imposes duties upon the people who are responsible for the operation of the Pension Fund. The people who operate your plan, called fiduciaries, have a duty to do so prudently and in the interest of you and other plan Participants and Beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. 11

12 Enforce Your Rights If you make a claim for a pension benefit that is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of documents or the latest annual report from the Fund and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the plan administrator (Board of Trustees) to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the administrator s control. If you have a claim for benefits, which is denied or ignored, in whole or in part, you may file suit in a state or federal court. In addition, if you disagree with the plan's decision, or lack thereof, concerning the qualified status of a domestic relations order, you may file suit in federal court. If it should happen that plan fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor ( DOL ), or you may file suit in a federal court. If you wish to seek assistance from the DOL, you should contact the DOL s Employee Benefits Security Administration ( EBSA ), which maintains regional and district offices covering your state or territory. You may obtain the contact information for the closest EBSA office (or receive other assistance) by calling, its toll free Hotline at EBSA [3272] (Text Telephone: ). You can also obtain information on the EBSA s website at - Additionally, your local telephone or government directory may list the EBSA office nearest to your residence. If you contact the DOL, it may be helpful if you have NPF s Employer Identification Number and its Plan Number 001. If you choose to file suit in a federal court, the court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. If you have any questions about NPF, please contact the Board of Trustees at the address above. cc: Sheet Metal Workers Local Unions NPF Contributing Employers SMACNA/Contractors Associations 12